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Why Microsoft Acquired Skype?

Thursday, May 12, 2011

Microsoft bought the internet phone service Skype for $US8.5 billion in its biggest-ever acquisition, placing a rich bet on mobile and the internet to try to best rivals such as Google.

In a deal that took a month from offer to signing, the software company outbid Google and Facebook, which sources said offered to partner or buy Skype for $US3 billion to $US4 billion.

Skype has 145 million users on average each month and has gained favor among small business users.

Microsoft is putting more energy and resources into mobile and the Internet as the personal computer business underpinning its Windows and Office franchise appears to be under threat.

The Luxembourg-based company, would give Microsoft a foothold in the video-conferencing market as businesses shift to cheaper ways of communicating.

Skype could be combined with Microsoft software such as Outlook to appeal to corporate users, while the voice and video communications could link to Microsoft's Xbox live gaming.

Skype also would offer Microsoft another route to develop its mobile presence, an area it has already put more energy and resources into as PC usage comes under threat. The deal, the biggest in technology so far in 2011, capped the strongest start to deal-making since 2000.

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